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Yahoo! Inc. (YHOO), Schlumberger Limited. (SLB), and Twenty-First Century Fox Inc (FOX): Why Is John Burbank Bullish on These Stocks?

John Burbank founded Passport Capital in San Francisco in 2000. Over the years, the fund managed to post great returns and currently manages close to $4 billion in assets. In its latest 13F filing, Passport revealed an equity portfolio worth $7.07 billion, up from $5.90 billion in the previous quarter. The equity portfolio is diversified, but is slightly inclined towards the Financial Sector, which amasses over 30% of the total portfolio. Moreover, during the third quarter, Mr. Bubrank has made some interesting moves, so we have picked three stocks on which he was most bullish during the third quarter, which are: Yahoo! Inc. (NASDAQ:YHOO)Schlumberger Limited. (NYSE:SLB), and Twenty-First Century Fox Inc (NASDAQ:FOX).


The manager of Passport Capital has significant increased the fund’s position in Yahoo! Inc. (NASDAQ:YHOO), which now represents the largest position in terms of value. After adding almost 6.92 million shares, Passport Capital holds 7.48 million shares, valued at $304.85 million. Passport initiated a stake during the second quarter, betting on Yahoo’s significant position in Alibaba Group Holding Ltd (NYSE:BABA), as the latter was preparing to go public on New York Stock Exchange. In fact, it was a strategy adopted by many investors, since following Alibaba Group Holding Ltd (NYSE:BABA), Yahoo got a $40 billion equity stake in the company. Overall, out of over 700 funds that we track at Insider Monkey, 94 funds reported holding shares of Yahoo! Inc. (NASDAQ:YHOO) in their latest 13F filings, this number going up from 79 funds in the previous quarter, the company being among top 10 most popular tech stocks.

Earlier, during an interview, Mr. Bubank explained why he is bullish on Yahoo. According to the investor, the company is undervalued, because the market does not fully reflect its equity investment in Alibaba. Moreover, Mr. Burbank said that Yahoo! Inc. (NASDAQ:YHOO)’s CEO Marissa Mayer will come up with a plan on how to spend these money in order to benefit the company and its investors, or activist investors will step up and come up with their own plan. In any case, both scenarios will results in Yahoo’s stock going up, according to Mr. Burbank.

So far, Marissa Mayer has announced a $640 million acquisition of ad platform BrightRoll, meant to improve Yahoo’s struggling core business. The move was made despite an earlier request made by Jeffrey Smith, the manager of Starboard Value, to cease acquisitions and consider spinning-off Yahoo’s equity assets. Starboard initiated a stake in Yahoo! Inc. (NASDAQ:YHOO) during the third quarter and owns 7.72 million shares as of the end of September.

On the second spot on our list comes Schlumberger Limited. (NYSE:SLB). In this company, Passport Capital upped its position by 200% over the quarter to 1.72 million shares, worth $175.30 million. The fund added the company to its equity portfolio during the first quarter, initially holding 80,400 shares. Meanwhile, Schlumberger’s stock inched up by around 6% and it raised its divident to $0.40, from $0.31. However, being an oil and gas exploration services company, Schlumberger Limited. (NYSE:SLB) might be affected by the decline of the oil prices that came as a result of an increase in supply.

Moreover, one of the company’s markets is in Russia, which is currently under sanctions imposed by the US and European Union. Nevertheless, in the third quarter, Schlumberger Limited. (NYSE:SLB) registered an increase in revenue to $12.73 billion from $11.65 billion a year ago, while its EPS went up to $1.49 from $1.29.

Ken Fisher‘s Fisher Asset Management is another shareholder of Schlumberger Limited. (NYSE:SLB), which trimmed its stake by 3,000 shares during the July-September period to 4.17 million shares.

Next in line is Twenty-First Century Fox Inc (NASDAQ:FOX), in which Passport raised its stake by 6% over the quarter to 4.45 million shares, the stake being valued at $142.21 million. Twenty-First Century Fox is another company that was added to Passport’s equity portfolio during the first quarter, the fund disclosing ownership of 289,500 shares in its 13F filing for the first quarter.

During the second quarter, Twenty-First Century Fox Inc (NASDAQ:FOX) announced that it plans to acquire Time Warner Inc (NYSE:TWX), but in August it withdraw its proposal, because Time Warner refused to engage in negotiations and the decision was not well-received by the market, sending the stock lower. However, after withdrawing the offer, Twenty-First Century Fox Inc (NASDAQ:FOX)’s board authorized a $6 billion buyback program that is expected to be completed within the next 12 months.

One of the investors that boosted its position in Twenty-First Century Fox Inc (NASDAQ:FOX) during the third quarter is Jeff Ubben‘s ValueAct Capital. The fund added 22.54 million shares to its equity portfolio and owns 25.20 million shares, valued at $839.41 million as of the end of the third quarter.

Disclosure: none

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